What Are Institutional Investors Worrying About Bitcoin?

1. SFOX believes that the decline of BTC is caused by the disappointment of institutional investors’ expectations

The third quarter of this year has been a relatively stable quarter for Bitcoin. It stayed above $10,000 for most of the third quarter before falling sharply by 17.6% in the last week of September.

Overall, Bitcoin ended the quarter down 24%, starting at $10,888 and ending at $8,271.

In this regard, a cryptocurrency analysis company called SFOX issued a report saying: "The downturn in market sentiment seems to be related to signals surrounding 'major' institutions that may not be as ready and willing to enter the crypto space as some previously thought. fears, which may have contributed to wider uncertainty about the future development of the industry."

Simply put, this statement means that SFOX believes that a series of events that everyone has paid close attention to during this period has greatly frustrated people's expectations that large institutions will actively participate in digital currency investment.

2. The "event" that caused institutional investors to hesitate to enter the market?

Regarding the events that caused institutional investors to hesitate to enter the market, the following are mainly listed:

"Apple executives have mixed interest in cryptocurrencies, showing continued institutional uncertainty about cryptocurrencies". Among them, CEO Cook believes that "currency should be in the hands of countries" and "is not satisfied with the idea of ​​a private group setting up a competing currency."

“Unexpected lukewarm market after Bakkt launches physically-settled BTC futures, leading to sharp drop in cryptocurrency markets”.

"PayPal, Visa, eBay and other giants withdrew from the Libra Association, leading to further uncertainty in the market about the private cryptocurrency business led by Facebook."

Apple's CEO Cook's remarks on digital currencies are not worth commenting on in my opinion. Everyone has their own field of expertise. Cook is the leader in the field of mobile phones, but in the field of digital currency, it is obvious from his remarks that his understanding is very limited. Celebrities like Cook and the well-known Buffett.

But I don't think their comments will sway many institutional investors. Take Buffett as an example. On Wall Street, there are a large number of institutions that do not agree with his views and invest in ways that are very different from his.

In addition, what they think of digital currency is actually not important at all, because their views neither affect their existing historical status nor their vested interests.

But our ordinary investors, I still suggest that we should not underestimate this field. Digital currency and blockchain are rare opportunities for ordinary people to counterattack and achieve a class leap.

Regarding the indifference of the market after the launch of Bakkt, I predicted before the launch of Bakkt that institutional investors who really want to participate will never be so stupid as to come in with great fanfare as soon as the platform is launched, and retail investors will die. Are institutional investors so stupid?

As for Facebook’s Libra project and its prospects, I also said in the previous article that it can’t shake the real digital currency at all, but it’s just a big drama of conflicting interests between centralized institutions. Libra is not a real digital currency, it is just a stable currency issued by another central institution, not an investment product. Investment institutions are unlikely to be interested in it.

In short, I don't think any of these three things are reasons to prevent institutional investors from entering the market.

If there are really institutions that have doubts about digital currencies because of these three things, it means that such institutional investors do not have enough understanding of digital currencies and blockchain technology.

This is not surprising at all, isn't Buffett like this? I believe there are many such institutions.

3. How should ordinary investors view the entry of institutional investors

In the investment market, what investors earn in the long run is the dividend of the development trend of the entire market. Therefore, for ordinary investors, the entry of institutional investors is undoubtedly a great benefit to the long-term development of the entire industry, making the market bigger and more stable.

In any booming market, only those who can seize the opportunity to participate will be the ones who can benefit the most. What we often say about obtaining excess returns from the market is for early participants.

If you wait until the market is mature and stable, where is the excess return? At that time, those who participate can only get the average return of the market at most.

SFOX also has a description, which I think reveals the true status quo of the digital currency investment market:

“SFOX client Tim Enneking, the first crypto fund manager, emphasized that the crypto industry may not be big enough for large institutions to get involved. The average size of a crypto fund is less than $10 million.

If you take every single crypto fund - including Pantera, the largest I know of; plus Grayscale's Bitcoin Trust, which isn't really a fund; all of that together - it's just crypto space And the crypto space itself, as I said, is a tiny fraction of the investment space. Therefore, it is impossible for large institutions to intervene on a large scale. "

Therefore, as long-term investors, if institutional investors have not yet entered the market, not only should we not be pessimistic, but we should be thankful. Because institutional investors will eventually enter the market in large numbers, compared to these institutions that are still outside the market, we are undoubtedly the early participants in this market.